“83% of the top 100 most prescribed generic medicines in the US have no domestic manufacturing source for their API.” — Charles Lyon, VP Manufacturing, Procurement & Logistics, API Innovation Center
And yet the capacity to produce these drug products already exists — sitting idle across US facilities operating at 50% or below.
Charles Lyon, VP of Manufacturing and Procurement at the API Innovation Center (APIIC), brings decades of experience in fine and specialty chemicals to one of the most pressing challenges in US healthcare: rebuilding domestic pharmaceutical manufacturing from the ground up. Before joining APIIC, Charlie held engineering and business leadership roles across chemical intermediates, specialty chemicals, and API production — giving him a front-row view of how the US gradually ceded control of its medicine supply to overseas producers.
In the latest PharmaSource podcast episode, Charlie explains how APIIC is taking a fundamentally different approach to reshoring — one that works with existing US capacity, leverages advanced manufacturing technology, and de-risks participation for CDMOs and API manufacturers through a public-private funding model.
America’s Pharmaceutical Supply Chain Is More Fragile Than Most Realize
The COVID-19 pandemic exposed a vulnerability that had been building for 20 to 30 years. US pharmaceutical manufacturing — particularly for active pharmaceutical ingredients — had gradually moved offshore, driven almost entirely by cost pressure and the inability to compete with Indian and Chinese producers on wafer-thin generic margins.
APIIC’s own research puts the scale of the problem in stark terms. For the top 100 most prescribed APIs in the United States, 83% have no domestic source of manufacturing. Look upstream at the key starting materials needed to produce some of the most critical APIs, and over 91% come exclusively from China and India.
“Cost pressures and very thin margins forced chemical and API manufacturing companies to reduce investment and look at other options. Simply put, the economics were not sufficient for these companies to continue to manufacture these molecules domestically,” Charlie explains.
What surprises many in the industry is that the problem is not one of physical infrastructure. APIIC’s research found that roughly 25% of US generic finished drug product facilities are operating at 50% capacity or lower — representing approximately 30 billion doses of available but idle production capacity.
“There’s no lack of physical infrastructure. The US has significant available capacity. We just need to activate it.”
The Invest-Contract-Partner Model: Orchestrating a Network, Not Building Facilities
APIIC’s approach is deliberately asset-light. Rather than building its own manufacturing plants, it operates as an orchestrator across a network of approximately 100 service providers spanning the full pharmaceutical value chain — from key starting material (KSM) suppliers through to API manufacturers and finished drug product companies.
The model operates in three stages:
Invest: APIIC’s in-house R&D team — staffed with dedicated research chemists and equipped with its own laboratory facilities — develops novel routes of synthesis using advanced manufacturing technologies, including continuous flow reactors. This is where APIIC takes on the technical and developmental risk.
Contract: APIIC transfers its developed chemistry to API manufacturing partners and coordinates finished drug product manufacturers to take the API through to final formulation.
Partner: Before a molecule enters R&D, APIIC secures multi-year purchase commitments from end customers — hospital systems, retail pharmacies, and US government entities. Demand is established first. Manufacturing follows.
“This is not a build-it-and-they-will-come approach. We have committed demand that flows completely upstream. That demand is what drives the engagement and commitment of our partners across the ecosystem.”
Government funding — from both state sources and federal agencies including the Department of Health and Human Services — is used to purchase equipment, modify facilities, and activate manufacturing capability. Critically, this public investment sits with APIIC, not with the manufacturing partner, removing the capital risk that has historically deterred domestic API production.
“The government funding de-risks the installation of equipment for our partners. It takes away the risk of investing in facilities without the certainty of demand.”
Lomustine: The First End-to-End Partnership
APIIC’s first proof-of-concept project illustrates exactly how the model works in practice. Lomustine is the leading chemotherapy treatment for glioblastoma — an aggressive and common form of malignant brain cancer. It currently has no US source of manufacturing.
Working with Missouri-based Apertus Pharmaceuticals and supported by Missouri State funding, APIIC developed a novel route of synthesis for lomustine using advanced manufacturing technology. The facility has now completed modifications and is in position to begin validation and process demonstration.
“We coordinated the partnerships to make US production of that API happen. We’re looking forward to making this critical chemotherapy available to the patients who need it.”
The lomustine project remains an active partnership and a template for the molecules that follow.
APIIC currently has six molecules active in its development pipeline, covering oncology, anaesthesia (general and local), cardiovascular, psychiatric, and pulmonary treatments. The target is 25 molecules within five years, with further growth planned beyond that.
But Charlie is clear that molecule count is not the primary metric.
“Our broader goal is to demonstrate and establish repeatable, reliable, high-quality capacity — and to take advantage of the available capacity not only in Missouri but across the US through our ecosystem.”
Solving the Cost Problem: Advanced Manufacturing Is the Answer
Generic drug margins are, in many cases, non-existent. That is precisely why manufacturing moved offshore in the first place. APIIC’s strategy for making domestic production economically viable rests on three pillars: committed demand, public funding to reduce capital costs, and the deployment of advanced manufacturing technology — particularly continuous flow reactors.
Continuous flow manufacturing is proven technology in Europe and Asia, but its adoption in the US lags significantly. Charlie attributes this to a familiar barrier: without committed demand or a visible return on investment, companies will not take the capital risk.
“I can speak to that personally from my past career. If there’s no line of sight to an acceptable ROI with a very thin margin, the technology sits on the sideline.”
When continuous flow is applied alongside novel chemistry, the benefits extend well beyond cost reduction. The equipment has a smaller physical footprint, reducing overhead. It dramatically lowers solvent usage, cutting waste and improving environmental performance. It improves process safety for operators. And it produces more consistent quality — which itself reduces downstream costs.
APIIC is still quantifying the precise savings on a molecule-by-molecule basis, but has already confirmed measurable reductions in raw material input and energy costs from its current pipeline.
AI and Digital Tools: Accelerating Chemistry Development
Data analytics is a core pillar of APIIC’s operations. The organization is currently developing predictive models to accelerate the screening of synthesis routes and optimize reaction conditions before any capital is committed or equipment designed.
Digital twins will be deployed once a process is confirmed, to continue refining and driving down costs through the production lifecycle.
“It’s a very important component of what we do in our R&D process. We use AI and digital tools to be faster and smarter at every stage before the capital is ever employed.”
What Needs to Happen for Reshoring to Succeed Long-Term
As APIIC scales, Charlie is candid about the systemic changes required to make pharmaceutical reshoring sustainable — not just for APIIC, but for the industry.
First, broader adoption of continuous flow and advanced manufacturing technology across the US. The ROI visibility problem needs to be solved at an industry level, not company by company.
Second, continued alignment of demand from public sector purchasers — federal and state government, hospital systems, and retail pharmacy. The demand signal needs to be durable and coordinated to pull manufacturing investment upstream.
Third, the reshoring effort cannot stop at API manufacturing.
“If we solve US-based API manufacturing and do not solve the US-based manufacturing of the key starting materials needed for those APIs, we’ve just kicked the problem upstream. We’re still dependent on India and China for the specialty and fine chemicals.”
Finally, Charlie makes the case for a public communications effort. Most Americans have no awareness of where the active ingredient in their medication comes from, or the conditions under which it was produced, he says. The industry has an opportunity — and arguably an obligation — to change that narrative, and to demonstrate that modern US chemical and pharmaceutical manufacturing is cleaner, safer, and more efficient than the perception that has allowed offshoring to go largely unchallenged.
“This is urgent. We’re vulnerable. But we have the capacity throughout the supply chain to act — and through coordinated partnerships, we can reshore in two years rather than the ten it would take to build a Greenfield facility. All of the factors are there.”
Charlie Lyon will be presenting the API Innovation Center network strategy at CDMO Live Americas in Boston in October 2026. Download the agenda.
